Lack of tender detracts from a good idea

THE last time a Coalition government ruled NSW, it decided the state needed a legal casino, after years of corruption involving illegal establishments. Perhaps due to the chequered history of the previous Labor government, the tender process was carried out with scrupulous integrity. A young James Packer, making his first public business foray, was the front man for the bid. His vision was bold - a world-class casino that would include a theatre and Channel Nine entertainment facilities.

What was eventually built did not meet the expectations of many, either on an architectural level or as a big tourist attraction for Sydney. Those problems have been spectacularly rectified by the renovation of the complex, which has produced a new hotel, world-class restaurants and a general lift in standard. But the point was that Packer was simply outbid by another consortium. He lost, the taxpayer won.

The present Coalition government should reflect on that experience when dealing with his proposal to build a high rollers' casino and premium luxury hotel at Barangaroo. He should be commended for his vision. On its surface, it's an excellent idea. A high rollers' casino, specifically targeted at overseas visitors, largely avoids the issue of problem gambling, while aiding tourism. We should certainly be doing more to attract the well-heeled Asian - particularly Chinese - tourist.

And the development of Barangaroo would be boosted by a hotel, although it's arguable that such an elite establishment would do little for the ambience of the precinct.

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The government should be applauded for at least having a process to deal with unsolicited proposals from the private sector. But the revelation that the guidelines were subtly altered shortly after Packer met the Premier, Barry O'Farrell, raises questions about the integrity of the process.

The present inquiry by the Independent Commission Against Corruption into the activities of several members of the former Labor government illustrates the potential dangers of avoiding due process. And the opposition's acquiescence to the casino proposal, given the former ALP heavyweights on the Packer payroll, will do nothing to engender confidence that Labor has reformed its mates culture.

It should be said that there's nothing underhand in the proposal for the hotel-casino but awarding it an inside track raises questions about whether the taxpayer's interests are being best served. The government should be doing all it can to encourage public-private proposals to deliver the infrastructure NSW needs. Generally, that process is best served by government outlining in general terms what it hopes to achieve, rather than being prescriptive, and allowing the private sector to put forward innovation solutions.

But occasionally the private sector will put forward ideas the government has not yet thought about. These deserve a separate process which preserves the intellectual property of the proponents. They are likely to be rare.

The Barangaroo proposal does not appear to be one of these ideas. The government's guidelines outline criteria: intellectual property or genuinely innovative ideas, ownership of real property or software or technology offering a unique benefit, unique financial arrangements, a unique ability to deliver a strategic outcome, or other demonstrably unique elements.

The casino proposal seems to qualify only on the last two, and those are arguable, and could be tested by a tender process. There's nothing unique about a casino or hotel - many companies might want to bid for such a project - nor do they have to be at Barangaroo.

Probably any NSW government would have been tempted to grant another licence after the Star's ended in 2019. But that's a long way from now and there's no need to decide yet who might win it. The Packer proposal is attractive. An offer to build the hotel in advance of operating a casino would be even more attractive. But that should be persuasive in a competitive tender process, not behind the Premier's Department's closed doors.